If you own one software stock it should be Salesforce, this investor says

J. Zechner Associates chairman and founder John Zechner says Salesforce (Salesforce Stock Quote, Chart, News, Analysts, Financials NYSE:CRM) looks attractive after a sharp pullback, arguing the company can adapt its software model to the AI shift.

Speaking on BNN Bloomberg’s Market Call on June 17, Zechner said Salesforce is one software name he would still own despite broader investor concern about the sector.

“If I thought, where am I going to go with software, it’s Salesforce,” Zechner said. “This thing’s traded at 12 times current annualized earnings, and the earnings are still growing at better than 10%.”

Zechner said the main concern is whether software-as-a-service companies can move beyond seat-based subscription models as customers adopt AI tools. He said Salesforce is already shifting toward more outcome-based products through Agentforce.

“They’re doing that to a degree with Agentforce,” he said.

Zechner also pointed to Salesforce’s recent acquisition of Fin, the San Francisco-based customer agent company founded as Intercom in 2011, as part of the company’s push into automated customer service.

The fund manager said AI-driven agents have helped increase automated responses from about 25% in 2023 to more than 70% today, reducing concerns that Salesforce could lose business to AI.

“The more you can put agent commerce in there, the more they’re going to get paid for it,” Zechner said.

Zechner said the software companies best positioned for the AI transition will be those that can integrate AI into existing products and help enterprise customers use the technology without having to build it themselves.

“The ones who can incorporate an AI model better within it and sell it to their customers,” he said. “Customers don’t necessarily all want to develop this themselves. It’s too much of a risk.”

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